COMMISSIONER OF INCOME TAX Vs. CHUNILAL HEMRAJ

JUDGEMENT

(1.) The assessee, Messrs. Chunilal Hemraj, has been assessed in the status of an unregistered firm in respect of the assessment year 1958-59, corresponding accounting year being 1364 B.S. The said assessment was made ex parte on March 14, 1962, under Section 23(4) of the Indian Income-tax Act, 1922. The said assessment was made under Section 23(4) because of the failure of the assessee to comply with the notices under Sections 22(2) and 22(4) of the Indian Income-tax Act, 1922. On May 9, 1962, an application was made under Section 27 of the said Act before the Income-tax Officer requiring the Income-tax Officer to reopen the assessment made under sectiom 23(4) and to make a fresh assessment on the ground that the assessee was prevented by sufficient cause from complying with the notices under Section 22(2) and 22(4) of the Indian Income-lax Act, 1922* It was admitted in the said petition under Section 27 of the Indian Income-tax Act, 1922, that the notice under Section 22(2) was served long ago, but it was stated that owing to the alleged illness of the accountant and various other domestic troubles the assessee could not comply with the said' notice. It was, thereafter, stated in the said petition that the said notice under Sections 22(2) of the Indian Income-tax Act, 1922, was not valid in law. It was further asserted that, though the notice under Section 22(4) of the Indian Income-tax Act, 1922, required the assessee to comply on December 26, 1961, the hearing was adjourned on the application of the assessee. By a further notice under Section 22(4), dated March 12, 1962, the assessee was informed that the hearing of the assessee's case was fixed on March 15, 1962, and oh the date of hearing, that is to say, March 15, 1962, the assessee had prayed for another adjournment till March 28, 1962. Thereupon, the assessee states that the assessee was served with a demand notice on March 25, 1962, and the assessment order under Section 23(4) of the Indian Income-tax Act, 1922, dated March 14, 1962. The assessee, therefore, contended that the assessee had no reasonable opportunity to comply with the notice under Section 22(4) of the Indian Income-tax Act. The Income-tax Officer rejected the application under Section 27 of the Indian Income-tax Act, 1922.

(2.) The assessee, thereupon, preferred an appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner held that as the typed date being March 14, 1962, in notice under Section 22(4) had been scored out in ink and the date, March 15, 1962, had been inserted, it was not possible to ascertain the correct position from the records and as the assessment of the partners was fixed for hearing on March, 15, 1962, it was quite possible that the notice on the firm was also, for, .March 15, 1962, by making the alterations in the assessee's copy of the notice, but through inadvertence no entry to that effect was made in the records of this case. In those circumstances, the Appellate Assistant Commissioner was of the opinion that the assessee did not have reasonable opportunity of complying with the notice under Section 22(4) of the Indian Income-tax Act, 1922. The Appellate Assistant Commissioner, however, did not refer to or deal with the question whether there has been failure or non-compliance by the assessee with the notice under Section 22(2) of the Indian Income-tax Act, 1922. The Appellate Assistant Commissioner allowed the appeal and directed a fresh assessment.

(3.) Revenue preferred appeal before the Income-tax Appellate Tribunal. The Income-tax Appellate Tribunal was of the opinion that in the present case the assessee was prevented from filing the return under Section 22(3) and, as such, the Income-tax Officer could not make an assessment for the failure of the assessee to file a return under Section 22(2) of the Indian Income-tax Act, 1922. The Tribunal was also of the opinion that the assessee was prevented by sufficient cause from complying with the notice under Section 22(4) of the Indian Income-tax Act, 1922. The Tribunal held that though there may have been a default under Section 22(2) that alone would not be sufficient to make an assessment under Section 23(4). Accord ing to the Tribunal, there must be further default under Section 22(3) of the Indian Income-tax Act, 1922, in order to attract the provisions of Section 23(4) of the Indian Income-tax Act, 1922. The Tribunal, therefore, dismissed the appeal.